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Students: get prepared with the right bank account

Students: get prepared with the right bank account

Category: Students

Updated: 25/07/2017
First Published: 25/07/2017

As results days are almost upon us, graduations abound and we edge towards a new academic year, prospective students and graduates might be starting to think about the most cost-effective bank account that will cover their day-to-day needs for the next chapter.

After all, choosing a good student bank account and finding out how to manage your finances will be an essential part of life, especially for those who will be living away from home for the first time, so getting it right is vital - and preparation is key!

We're here to help, with our latest analysis highlighting some of the most essential elements when it comes to choosing the right student account, together with a few top tips on how students can prepare themselves for the years ahead.

"There can be a fine line between choosing the perfect student account for someone's circumstances and accidently picking a poor account if it's not thought through," said Rachel Springall, finance expert at moneyfacts.co.uk.

"As with any bank account, the best deal entirely depends on how someone uses the account. While students could be tempted by an account with perks, it may not end up being the most cost-effective choice over the next few years if they don't make use of them."

  • Interest-free overdraft

One of the most appealing features of a student account - and arguably the most beneficial for the years ahead - could be the interest-free overdraft. This can be a lifeline for those unable to earn an income that sufficiently covers their expenses, and means students needn't worry about overdraft fees in the midst of their studies.

Currently, Halifax and HSBC are the banks that offer the most generous interest-free overdraft facility of £3,000 upfront. "However, as with any bank account, it's worth noting that the advertised overdraft limits are not a guarantee as applicants will be credit checked, so having a good credit score is important," said Rachel. "There are also some accounts which spread the overdraft facility to students over the years of their study, which can be a much more sensible option for some."

  • Branch isn't always best

Don't always assume that a bank with an on-campus branch will provide the best package for your needs, as this convenience could cost. "Instead, students would be wise to swot up on what's available to them and compare every incentive before they pick an account," said Rachel.

"Whilst living away from home and overseeing their own finances may seem daunting, it's worth remembering that most banks and building societies now offer 'on the go' banking. Mobile apps and online access can mean a branch on their doorstep might not be as essential as they may think."

  • Travel perks

Although some student account perks can be gimmicky, others are genuinely beneficial, and that definitely includes travel perks. After all, "it can be an expensive commute to visit family members during the holidays or to fit in a mini-break, so any savings to be made here will be highly attractive," said Rachel.

Currently, two of the most lucrative incentives for those looking to reduce the cost of travelling across the country would be a railcard, available from Santander's student offering, or a coach card from NatWest. The savings could soon add up.

  • Part-time income

It's important to remember that a sizeable overdraft will eventually need to be repaid, so while it can easily be a temptation, you'll want to try and use it sparingly. Either that, or get a part-time job!

If you can fit it in during your years of study, then getting a part-time job - perhaps around lectures, or purely during academic breaks - could be a great way to earn an income and reduce any overdraft you may owe. That student loan won't go too far, after all...

  • Graduate considerations

Once you graduate, your needs will change again, which is when it's time to switch to a graduate current account. However, you'd be wise to compare accounts and not assume that your current provider will offer the best possible option, as you'd never know what deals you could get elsewhere.

For example, "some of these accounts will offer interest on balances and cashback on spending, which will come in handy when graduates are earning a decent wage," said Rachel, "and it will certainly be refreshing once they get their account back in the black."

Ready to find the right account for your needs? Check out the tables below for a selection of the best student and graduate bank accounts to get you started.

Selection of Student Accounts

Provider / Account Name Credit interest gross Interest free overdraft Authorised overdraft EAR Incentives

Bank of Scotland

Student Account

0%

Year 1 - up to £1,500
(0-6 months £500, 7-9 months £1,000 and 10 months+ £1,500)

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £2,000

Year 5 - up to £2,000

Year 6 - up to £2,000

8.21%

Plus £6pm usage

Commission-free foreign currency and traveller's cheques.

Free to register for Everyday offers and sign up for It's On Us.

Earn up to 15% cashback from selected retailers when shopping with a Bank of Scotland debit and/or credit card. Customers must be registered for Online Banking.

Barclays Bank

Student Additions

0%

Year 1 - up to £1,000

Year 2 - up to £2,000

Year 3 - up to £3,000

£15 fee-free buffer

Overdrawn costs:
£0.01 to £1,000 = Nil

£1,000.01 to £2,000 = £0.50p per day

£2,000.01 and over = £1 per day

Earn cashback through Barclays SmartSpend - a free service that's available to everyone who uses Online Banking.

Customers will earn more from SmartSpend when they join Barclays Blue Rewards - an extra 1% cashback on purchases. Blue Rewards is available as an add-on for £3pm = Loyalty reward of £7 per month paid.

Extra rewards available on taking insurance products.

Halifax

Student Account

0.10% Year 1 onwards - up to £3,000 7.20%

Commission free traveller's cheques and currency.

Cashback Extras - Earn up to 15% cashback from selected retailers.

HSBC

Student Bank Account

1.74%

for first year
up to £1,000*

Year 1 onwards - up to £3,000 0%

Access to Student Exclusives - offers and discounts.

Commission-free foreign currency.

*Interest no longer available from 1st August 2017.

Lloyds Bank

Student Account

0%

Year 1 - up to £1,500
(0-6 months £500, 7-9 months £1,000 and 10 months+ £1,500)

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £2,000

Year 5 - up to £2,000

Year 6 - up to £2,000

8.21%

Plus £6pm usage

Commission-free foreign currency and traveller's cheques.

Free to register for Everyday offers and sign up for It's On Us.

Earn up to 15% cashback from selected retailers when shopping with a Lloyds Bank debit and/or credit card. Customers must be registered for Online Banking.

Nationwide BS

Flex Student

1.00%

up to £1,000

Year 1 - up to £1,000

Year 2 - up to £2,000

Year 3+ - up to £3,000

Not available

Simply Rewards - Earn cashback from selected retailers.

No charges for using debit card abroad.

A range of interactive educational support and tools.

NatWest

Student Account

0%

Year 1 - up to £2,000
(1-4 months £500, 5-6 months £2,000)

Year 2 - up to £2,000

Year 3 - up to £2,000

Year 4 - up to £2,000

Year 5 - up to £2,000

Not available

Free National Express Young Persons Coachcard. Valid for four years, with students saving up to one third on most coach travel in the UK.

Free 24/7 Emergency Cash Service.

Royal Bank of Scotland

Student Account

0%

Year 1 - up to £2,000
(1-4 months £500, 5-6 months £2,000)

Year 2 - up to £2,000

Year 3 - up to £2,000

Year 4 - up to £2,000

Year 5 - up to £2,000

Not available

Free National Express Young Persons Coachcard. Valid for four years, with students saving up to one third on most coach travel in the UK.

Free 24/7 Emergency Cash Service.

Santander

123 Postgrauate Account

1% at £100

1.98% at £200

2.96% at £300 up to £2,000

Year 1 - up to £1,500

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £1,800

Not available

Earn up to 15% cashback from selected retailers.

Free access to preferential rates, exclusive offers and discounts at 123 World.

Santander

123 Student Current Account

1% at £100

1.98% at £200

2.96% at £300 up to £2,000

Year 1 - up to £1,500

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £1,800

Not available

Earn up to 15% cashback from selected retailers.

Free access to preferential rates, exclusive offers and discounts at 123 World.

TSB

Student Account

4.89%

up to £500

Year 1 - up to £1,500
(0-6 months £500, 7-9 months £1,000 and 10 months+ £1,500)

Year 2 - up to £1,500

Year 3 - up to £1,500

Year 4 - up to £1,500

Year 5 - up to £1,500

£10 interest free and fee-free buffer

8.21%

Source: Moneyfacts.co.uk Compiled 21/07/2017
This table does not include every account on the market and is to be used as a guide only. E.g. It does not include accounts available in NI only.

Selection of Graduate Accounts


Provider / Account Name Credit interest gross Interest free overdraft Authorised overdraft EAR Incentives

Bank of Scotland

Graduate Account (Existing Student Account customers only)

0%

Year 1 - up to £2,000

Year 2 - up to £1,500

Year 3 - up to £1,000

19.89%

Plus £6pm usage

Commission-free foreign currency and traveller's cheques.

Free to register for Everyday offers and sign up for It's On Us.

Earn up to 15% cashback from selected retailers when shopping with a Bank of Scotland debit and/or credit card. Customers must be registered for Online Banking.

Barclays Bank

Higher Education Account

0%

Year 1 - up to £3,000

Year 2 - up to £2,000

Year 3 - up to £1,000

Overdrawn costs:
£0.01 to £1,000 = Nil

£1,000.01 to £2,000 = £0.50p per day

£2,000.01 and over = £1 per day

Earn cashback through Barclays SmartSpend - a free service that's available to everyone who uses Online Banking.

Customers will earn more from SmartSpend when they join Barclays Blue Rewards - an extra 1% cashback on purchases. Blue Rewards is available as an add-on for £3pm = Loyalty reward of £7 per month paid.

Extra rewards available on taking insurance products.

HSBC

Graduate Bank Account

0%

Year 1 - up to £1,500

Year 2 - up to £1,000

19.90%

Preferential savings rates, mortgage deals and commission free foreign currency.

Lloyds Bank

Graduate Account

(Existing Student Account customers only)

0%

Year 1 - up to £2,000

Year 2 - up to £1,500

Year 3 - up to £1,000

19.89%

Plus £6pm usage

Commission-free foreign currency and traveller's cheques.

Free to register for Everyday offers and sign up for It's On Us.

Earn up to 15% cashback from selected retailers when shopping with a Lloyds Bank debit and/or credit card. Customers must be registered for Online Banking.

Nationwide BS

FlexGraduate

0%

Year 1 - up to £2,500

Year 2 - up to £1,750

Year 3 - up to £1,000

Not available

Simply Rewards - Earn cashback from selected retailers.

No charges for using debit card abroad.

NatWest

Graduate

0%

Year 1 - up to £2,000

Year 2 - up to £1,000

17.81%

Free tastecard membership.

Free 24/7 Emergency Cash Service.

Royal Bank of Scotland

Graduate

0%

Year 1 - up to £2,000

Year 2 - up to £1,000

9.90%

Free tastecard membership.

Free 24/7 Emergency Cash Service.

Santander

123 Graduate Account

1% at £100

1.98% at £200

2.96% at £300 up to £2,000

Year 1 - up to £2,000

Year 2 - up to £2,000

nil

£12 fee-free buffer

Earn up to 15% cashback from selected retailers.

Free access to preferential rates, exclusive offers and discounts at 123 World.

TSB

Graduate Account

0%

Year 1 - up to £2,000

Year 2 - up to £1,500

Year 3 - up to £1,000

£10 interest free and fee-free buffer

16.77%

Source: Moneyfacts.co.uk Compiled 21/07/2017
This table does not include every account on the market and is to be used as a guide only. E.g. It does not include accounts available in NI only.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
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